Attached files
| file | filename |
|---|---|
| EX-99.2 - SUPPLEMENTAL FINANCIAL INFORMATION FOR THE QUARTER AND YEAR ENDED DEC 31, 2016 - FULTON FINANCIAL CORP | exhibit99212-31x16.htm |
| 8-K - 8-K - FULTON FINANCIAL CORP | fult8-k12x31x16.htm |
| EX-99.1 - PRESS RELEASE DATED JANUARY 17, 2017 - FULTON FINANCIAL CORP | exhibit99112-31x16.htm |
D A T A A S O F D E C E M B E R 3 1 , 2 0 1 6
U N L E S S O T H E R W I S E N O T E D
2016 AND FOURTH QUARTER RESULTS
FORWARD-LOOKING STATEMENTS
This presentation may contain forward-looking statements with respect to Fulton Financial Corporation’s financial
condition, results of operations and business. Do not unduly rely on forward-looking statements. Forward-looking
statements can be identified by the use of words such as “may,” “should,” “will,” “could,” “estimates,” “predicts,”
“potential,” “continue,” “anticipates,” “believes,” “plans,” “expects,” “future,” “intends” and similar expressions which
are intended to identify forward-looking statements. Management’s “2017 Outlook” contained herein is comprised of
forward-looking statements.
Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, some
of which are beyond the Corporation’s control and ability to predict, that could cause actual results to differ materially
from those expressed in the forward-looking statements. The Corporation undertakes no obligation, other than as
required by law, to update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise.
A discussion of certain risks and uncertainties affecting the Corporation, and some of the factors that could cause the
Corporation’s actual results to differ materially from those described in the forward-looking statements, can be found
in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015 and Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2016, June 30, 2016 and September 30, 2016, which have
been filed with the Securities and Exchange Commission and are available in the Investor Relations section of the
Corporation’s website (www.fult.com) and on the Securities and Exchange Commission’s website (www.sec.gov).
The Corporation uses certain non-GAAP financial measures in this presentation. These non-GAAP financial measures
are reconciled to the most comparable GAAP measures at the end of this presentation.
2
2016 HIGHLIGHTS
Diluted Earnings Per Share
• $0.24 diluted earnings per share in 4Q16, $0.93 YTD
Loan and Core Deposit Growth
• 6.0% annual increase in average loans and 9.3% annual increase in average core deposits
• Ending loans increased 6.2% in 2016
Net Interest Income & Margin
• Net interest income increased 4.2% in 2016 while net interest margin decreased 3 bps
• 4Q16 saw an increase in each compared to 3Q16
Asset Quality
• Increase in provision, driven by loan growth, with lower net charge-offs and delinquencies
Non-Interest Income (Excluding Securities Gains)
• Increase of 8.6% in 2016, with increases in most categories
Non-Interest Expenses (Excluding Loss on Redemption of TruPS)
• Increase of 3.2% in 2016 reflecting continued investment in revenue generating personnel, as well
as investments in back office infrastructure
3
INCOME STATEMENT SUMMARY – ANNUAL COMPARISON
(1) ROA is return an average assets determined by dividing net income for the period indicated by average assets
(2) Non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the slide titled “Non-GAAP Reconciliation” at the end of this presentation.
Net Income of $161.6 million, up 8.1% due
primarily to higher net interest income and non-
interest income, partially offset by higher loan loss
provision and higher non-interest expense
Net Interest Income
Net interest income up 4.2%, due to 5.4% increase
in average interest earning assets, partially offset by
lower net interest margin
Loan Loss Provision
$13.2 million provision in 2016, driven by loan
growth
Non-Interest Income
Increase of 8.6% driven primarily by commercial
loan interest rate swap fees, SBA loan sale gains,
IMTS, mortgage banking income and merchant fees
Non-Interest Expense
Increase of 3.2% largely driven by higher salaries
and benefits and software amortization expense,
partially offset by lower outside services
Effective Tax Rate
Declined due to higher net tax credits in 2016 arising
from community development investments
2016 2015 Change
Net Interest Income 520,772$ 499,994$ 20,778$
Loan Loss Provision 13,182 2,250 10,932
Non-Interest Income 187,628 172,773 14,855
Securities Gains 2,550 9,066 (6,516)
Non-Interest Expense 489,519 474,534 14,985
Loss on redemption of TruPS - 5,626 (5,626)
Income before Income Taxes 208,249 199,423 8,826
Income Taxes 46,624 49,921 (3,297)
Net Income 161,625$ 149,502$ 12,123$
Per Share (Diluted) 0.93$ 0.85$ 0.08$
ROA (1) 0.88% 0.86% 0.02%
ROE (tangible) (2) 10.30% 10.01% 0.29%
Efficiency ratio (2) 67.2% 68.6% (1.4%)
(dollars in thousands, except per-share data)
4
INCOME STATEMENT SUMMARY – QUARTERLY COMPARISON
Net Income of $42.2 million; a 1.6% increase
from 3Q16 and a 9.4% increase from 4Q15
Net Interest Income
From 3Q16: Increase of 1.3% due to a 1.2%
increase in average earning assets and a 1 bp
improvement in net interest margin (NIM)
From 4Q15: Increase of 3.5% due to 5.5%
increase in average earning assets being partially
offset by a 4 bp decrease in NIM
Loan Loss Provision
$5.0 million provision in 4Q16 due primarily to loan
growth and one non-performing commercial loan
Non-Interest Income
From 3Q16 and 4Q15: Increase of 6.4% and 13.7%,
respectively, primarily driven by increases in
mortgage banking income and SBA loan sale gains
Non-Interest Expenses
From 3Q16: Increase of 6.5% due to higher
salaries and benefits and property write-offs
From 4Q15: Increase of 7.8% primarily due to
higher salaries and benefits
Effective Tax Rate
Lower effective tax rate due largely to rehabilitation
tax credit on one community development
investment in 4Q16
(1) ROA is return an average assets determined by dividing net income for the period indicated by average assets
(2) Non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the slide titled “Non-GAAP Reconciliation” at the end of this presentation.
4Q16 3Q16 Change
Net Interest Income 132,237$ 130,565$ 1,672$
Provision for Credit Losses 5,000 4,141 859
Non-Interest Income 51,230 48,147 3,083
Securities Gains 1,525 2 1,523
Non-Interest Expense 127,621 119,848 7,773
Income before Income Taxes 52,371 54,725 (2,354)
Income Taxes 10,221 13,257 (3,036)
Net Income 42,150$ 41,468$ 682$
Per Share (Diluted) 0.24$ 0.24$ -$
ROA (1) 0.89% 0.89% -
ROE (tangible) (2) 10.47% 10.38% 0.09%
Efficiency ratio (2) 67.6% 65.2% 2.4%
(dollars in thousands, except per-share data)
5
NET INTEREST INCOME AND MARGIN – QUARTER COMPARISON
Net Interest Income & Net Interest Margin
~ $730
million
~ $610
million
$127.8 $129.1 $128.9 $130.6 $132.2
3.19% 3.23% 3.20% 3.14% 3.15%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
4Q15 1Q16 2Q16 3Q16 4Q16
Net Interest Income
Average Interest-Earning Assets & Yields
Average Liabilities & Rates
$2.8 $2.8 $2.8 $3.0 $2.9
$13.7 $13.9 $14.0 $14.2 $14.5
3.67% 3.72% 3.69% 3.63% 3.62%
0.0%
2.0%
4.0%
$-
$3.0
$6.0
$9.0
$12.0
$15.0
$18.0
4Q15 1Q16 2Q16 3Q16 4Q16
Securities & Other Loans Earning Asset Yield (FTE)
$14.2 $14.2 $14.4 $14.7 $15.0
$1.2 $1.4 $1.4
$1.4 $1.3
0.69% 0.70% 0.70% 0.70% 0.69%
0.5%
0.7%
0.9%
$-
$3.0
$6.0
$9.0
$12.0
$15.0
4Q15 1Q16 2Q16 3Q16 4Q16
Deposits Borrowings Cost of Interest-bearing Liabilities
($ IN MILLIONS) ($ IN BILLIONS)
($ IN BILLIONS)
6
ASSET QUALITY – ANNUAL COMPARISON
($ IN MILLIONS)
$40.5
$12.5
$2.3
$13.2
$-
$10.0
$20.0
$30.0
$40.0
$50.0
2013 2014 2015 2016
Provision for Credit Losses Non-Performing Loans (NPLs) & NPLs to Loans 132.82% 134.26%
118.37%
130.15%
1.60%
1.42% 1.24% 1.17%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
0.0%
25.0%
50.0%
75.0%
100.0%
125.0%
150.0%
2013 2014 2015 2016
Allowance/NPLs Allowance/Loans
Net Charge-offs (NCOs) and NCOs to Average Loans Allowance for Credit Losses (Allowance) to NPLs & Loans
$61.0
$31.5
$16.8 $13.3
0.49%
0.24%
0.13%
0.09% 0.00%
0.50%
1.00%
1.50%
2.00%
$-
$40.0
$80.0
2013 2014 2015 2016
NCOs NCOs/Average Loans
$154.3
$138.5 $144.8 $131.6
1.21 1.06% 1.05% 0.90%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
$-
$25.0
$50.0
$75.0
$100.0
$125.0
$150.0
$175.0
2013 2014 2015 2016
NPLs NPLs/Loans
7
NON-INTEREST INCOME – QUARTER COMPARISON
($ IN MILLIONS)
Non-Interest Income, Excluding Securities Gains
~ $730
million
~ $610
million
$45.1
$42.2
$46.1
$48.1
$51.2
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
4Q15 1Q16 2Q16 3Q16 4Q16
Mortgage Banking Income & Spreads
Other Non-Interest Income
1.60%
1.28%
1.71% 1.73%
1.94%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
$(1.0)
$-
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
4Q15 1Q16 2Q16(2) 3Q16(2) 4Q16(2)
Gains on Sales Servicing Income Spread on Sales (1)
$4.3 $4.0 $3.9 $4.5
$7.0
$-
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
4Q15 1Q16 2Q16 3Q16 4Q16
Invt Mgmt & Trust Srvs Deposit Srv Chgs Oth Srv Chgs Other
$40.7
$38.2
$42.2
$43.6 $44.2
(1) Represents Gains on Sales divided by total new commitments to originate residential mortgage
loans for customers.
(2) Servicing income includes $1.7 and $1.3 million Mortgage Servicing Rights (MSR) impairment
charges in 2Q16 and 3Q16, respectively, and a $1.7 million recovery in 4Q16.
8
NON-INTEREST EXPENSES – QUARTER COMPARISON
($ IN MILLIONS)
Non-Interest Expense & Efficiency Ratio (1)
~ $730
million
~ $610
million
$118.4
$120.4 $121.6 $119.8
$127.6
66.6%
68.3%
67.6%
65.2%
67.6%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
4Q15 1Q16 2Q16 3Q16 4Q16
Salaries and Employee Benefits & Staffing
Other Non-Interest Expenses
3,520 3,491
-
2,000
4,000
6,000
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
4Q15 1Q16 2Q16 3Q16 4Q16
Total Salaries Employee Benefits Average Full-time Equivalent Employees
$65.5
$69.4 $70.0 $70.7
$73.3
$-
$10.0
$20.0
$30.0
$40.0
$5 .0
$60.0
4Q15 1Q16 2Q16 3Q16 4Q16
Occp & Equip Data Processing & Software Outside Srvs Other
$52.9
$51.0 $51.6 $49.1
$54.4
(1) Non-GAAP based financial measure. Please refer to the calculation and
management’s reasons for using this measure on the slide titled “Non-
GAAP Reconciliation” at the end of this presentation.
9
$1.8 $2.1
$3.2 $4.3
$4.9 $4.6
$1.4
$8.6 $5.9 $4.1
13
26
30
45 47
56
$-
$3.0
$6.0
$9.0
$12.0
0
10
20
30
40
50
60
70
2011 2012 2013 2014 2015 2016
Salarie s & Be nefits Expense Outsi de Consul ti ng Services and Te mpora ry Staffing (1) Staffing
$0.8
$0.1
COMPLIANCE & RISK MANAGEMENT
(1) Represents third-party consulting, legal and staffing services directly related to BSA/AML compliance program.
To
tal
Exp
e
n
se
s, in
m
illio
n
s
• Strengthening Risk Management and Compliance infrastructures
• Address deficiencies within BSA/AML compliance
• BSA/AML enforcement actions at the Corporation and banking subsidiaries
• Significant investments in personnel, outside services and systems
BSA/AML Compliance Program Expenses and Staffing
To
tal
N
u
m
b
e
r
o
f
Em
p
lo
ye
e
s
at
Pe
ri
o
d
E
n
d
10
PROFITABILITY & CAPITAL – ANNUAL COMPARISON
ROA (1) ROE (tangible) (2)
Tangible Common Equity Ratio (2) Diluted Earnings Per Common Share
10.76% 10.31% 10.01%
10.30%
0.00%
4.00%
8.00%
12.00%
2013 2014 2015 2016
0.96% 0.93%
0.86% 0.88%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
2013 2014 2015 2016
$ 0.83 $ 0.84 $ 0.85
$0.93
$-
$0.25
$0.50
$0.75
$1. 0
2013 2014 2015 2016
(1) ROA is return an average assets determined by dividing net income for the period indicated by average assets.
(2) Non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the slide titled “Non-GAAP Reconciliation” at the end of this presentation.
9.3%
8.8% 8.7% 8.6%
0.0%
4.0%
8.0%
12.0%
2013 4 2015 2016
11
2017 OUTLOOK
• Loans & Deposits: Annual average growth rate in the mid- to high-single digits
• Net Interest Margin: Modest improvement (flat to 5 basis points) on a quarterly
basis in Q1 and Q2; Q3 and Q4 margin trends will be largely dependent upon
changes in the federal funds rate and competitor actions.
• Asset Quality: Provision driven primarily by loan growth
• Non-Interest Income (Excluding Securities Gains): Mid- to high-single digit growth
rate
• Non-Interest Expense: Low- to mid-single digit growth rate
• Capital: Focus on utilizing capital to support growth and provide appropriate
returns to our shareholders
12
NON-GAAP RECONCILIATION
D ec 31, Sep 30, Jun 30, M ar 31, D ec 31,
2016 2016 2016 2016 2015 2016 2015
Eff iciency rat io
Non-interest expense 127,621$ 119,848$ 121,637$ 120,413$ 118,439$ 489,519$ 480,160$
Less: Intangible amortization - - - - (6) - (247)
Less: Loss on redemption of trust preferred securities - - - - - - (5,626)
Numerator 127,621$ 119,848$ 121,637$ 120,413$ 118,433$ 489,519$ 474,287$
Net interest income (fully taxable equivalent) 137,571$ 135,784$ 133,890$ 134,026$ 132,683$ 541,271$ 518,464$
P lus: Total Non-interest income 52,755 48,149 46,137 43,137 45,839 190,178 181,839
Less: Investment securities (gains) losses (1,525) (2) (76) (947) (776) (2,550) (9,066)
Denominator 188,801$ 183,931$ 179,951$ 176,216$ 177,746$ 728,899$ 691,237$
Efficiency ratio 67.60% 65.16% 67.59% 68.33% 66.63% 67.16% 68.61%
D ec 31, Sep 30,
2016 2016 2016 2015 2014 2013
(dollars in thousands)
R eturn o n A verage Shareho lders' Equity (R OE) (T angible)
Net income 42,150$ 41,468$ 161,625$ 149,502$ 157,894$ 161,840$
P lus: Intangible amortization, net of tax - - - 161 818 1,585
Numerator 42,150$ 41,468$ 161,625$ 149,663$ 158,712$ 163,425$
Average shareholders' equity 2,132,655$ 2,120,596$ 2,100,634$ 2,026,883$ 2,071,640$ 2,053,821$
Less: Average goodwill and intangible assets (531,556) (531,556) (531,556) (531,618) (532,425) (534,431)
Average tangible shareholders' equity (denominator) 1,601,099$ 1,589,040$ 1,569,078$ 1,495,265$ 1,539,215$ 1,519,390$
Return on average common shareholders' equity (tangible), annualized 10.47% 10.38% 10.30% 10.01% 10.31% 10.76%
Year Ended D ec 31,
(dollars in thousands)
T hree M o nths Ended
T hree M o nths Ended
Year Ended D ec 31,
Note: The Corporation has presented the following non-GAAP (Generally Accepted Accounting Principles) financial measures because it believes
that these measures provide useful and comparative information to assess trends in the Corporation's results of operations and financial condition.
Presentation of these non-GAAP financial measures is consistent with how the Corporation evaluates its performance internally and these non-
GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the
Corporation's industry. Investors should recognize that the Corporation's presentation of these non-GAAP financial measures might not be
comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP
basis measures and the Corporation stro gly encourages a review of its condensed consolidated financial statements in their entirety.
13
NON-GAAP RECONCILIATION (CONTINUED)
FFC Consolidated
D ec 3 1, D ec 3 1, D ec 3 1, D ec 3 1,
2 0 16 2 0 15 2 0 14 2 0 13
Tang ib le C ommon Equit y t o Tang ib le A sset s ( TC E R at io )
Shareholders' equity 2,121,115$ 2,041,894$ 1,996,665$ 2,063,187$
Less: Intangible assets (531,556) (531,556) (531,803) (533,076)
Tangible shareholders' equity (numerator) 1,589,559$ 1,510,338$ 1,464,862$ 1,530,111$
Total assets 18,944,247$ 17,914,718$ 17,124,767$ 16,934,634$
Less: Intangible assets (531,556) (531,556) (531,803) (533,076)
Total tangible assets (denominator) 18,412,691$ 17,383,162$ 16,592,964$ 16,401,558$
Tangible Common Equity to Tangible Assets 8 .6 3 % 8 .6 9 % 8 .8 3 % 9 .3 3 %
D ec 3 1, Sep 3 0 ,
2 0 16 2 0 16 2 0 16 2 0 15 2 0 14 2 0 13
Pre- Provision N et R evenue
Net interest income 132,237$ 130,565$ 520,772$ 499,994$ 514,867$ 527,194$
Non-interest income 52,755 48,149 190,178 181,839 167,379 187,664
Less: Investment securit ies gains (1,525) (2) (2,550) (9,066) (2,041) (8,004)
Total Revenue 183,467 178,712 708,400 672,767 680,205 706,854
Non-interest expense 127,621 119,848 489,519 480,160 459,246 461,433
Less: Loss on redemption of TruPS - (5,626) - -
Total Non-interest expense, as adjusted 127,621 119,848 489,519 474,534 459,246 461,433
Pre- Provision N et R evenue 55,846$ 58,864$ 218,881$ 198,233$ 220,959$ 245,421$
(dollars in thousands)
(dollars in thousands)
Y ear Ended D ec 3 1,
Three M ont hs Ended
14
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